20041112Press Release.pdf

IDAHO PUBLIC UTILITIES COMMISSION
Case No. PAC-02-
November 10, 2004
Contact: Gene Fadness [phone]
Website: www.puc.state.id.
PUC seeks comment on PacifiCorp cost plan
Boise - The Idaho Public Utilities Commission is seeking comments from Idaho customers of
PacifiCorp on a proposed resolution of a longstanding process on how to allocate costs to serve
customers in the utility s six state jurisdictions.
After years of negotiations, interested parties in all the affected states have submitted a uniform
protocol to address the cost issues. The protocol must gain approval from the state public utility
commissions of each state involved.
In 1989, Pacific Power & Light merged with Utah Power & Light to create PacifiCorp. That
merger brought Idaho s customers of Utah Power & Light into PacifiCorp.
Since the merger, each of the six state commissions in PacifiCorp s territory has apportioned
costs of generation to customers using differing methods. Cost recovery problems today are the
result of states adopting varying methodologies that do not result in full cost recovery, according
to PacifiCorp. That leads to uncertainty in financial markets about whether the company will be
able to recover the costs of investment in capital improvements and additions. Absent resolution
of these issues, it is difficult for the company to make adequate investment in new resources
given concerns about the risk of cost recovery. The need for agreement has become more critical
in recent years with the rapid growth in customer demand in PacifiCorp s service territory.
In what has come to be known as the Multi-State Process, staffs from state commissions
including Idaho, as well as industrial customers and consumer organizations, such as Monsanto
and the AARP, have been negotiating for several years toward a more uniform method of cost
allocation
PacifiCorp contends that ratification of this agreement will provide the company assurance that it
will have a reasonable opportunity to recover prudent investments in new generation and
transmission facilities and required improvements to existing facilities.
A significant challenge in the negotiations has been how to fairly allocate more expensive
thermal resources and less expensive hydro resources across PacifiCorp s entire system. Most of
the generating resources in PacifiCorp s western region of Washington, Oregon and California
are hydroelectric dams while the eastern region of Idaho, Utah and Wyoming is more dependent
on thermal resources, such as coal and natural gas.
Part of the proposed agreement is a "hydro endowment " that reflects the differences in cost
attributed to the former Pacific Power & Light states of Oregon, Washington, California and part
of Wyoming.
In the near term, through 2008, the proposed cost allocation methodology results in a 2 percent
higher revenue requirement for Idaho. The results beyond 2008 are more favorable to Idaho
because future hydro relicensing costs would be assigned to Washington and Oregon.
Workshops explaining the company ~ petition were held in October in Preston and Rexburg. The
commission is accepting comments from the parties of record through Nov. 23 and from the
public through Dec. 6.
Comments are accepted via e-mail by accessing the commission s homepage at
www.puc.state.id.and clicking on "Comments & Questions." Fill in the case number (PAC-
02-3) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ill
83720-0074 or faxed to [phone].
PacifiCorp s application is available on the commission s Web site. Click on "File Room " then
on "Electric Cases " and scroll down the case number.